About VGTR

What you need to know about

Video Games Tax Relief

Video Games - a great British industry

Since the introduction of the Brown Box Odyssey designed by Ralph Baer in 1967, the UK games industry has gone from bedroom coding to global leadership, combining arts and technology to deliver some of the most successful games in the history of the medium.

Video Games Tax Relief (VGTR) provides an additional incentive for UK games developers to maintain our world leading status in games development.

History

In the 2012 Budget the Government announced that the existing Film Tax Relief style tax incentives would be extended to the UK's animation and video game producers alongside other creative sector tax incentives.

Policy intent

VGTR was introduced to encourage firms who may have been forced to leave the UK for other territories, offering tax incentives, such as Canada, in order to cut costs, to remain and invest in games development in the UK.

Introduction

Animation Tax Relief (ATR) was introduced in 2013 and Video Game Tax Relief (VGTR) was introduced in April 2014 after full approval of the incentive was given by the European Commission in March 2014.

Who can claim VGTR?

VGTR applies to Video Games Development Companies engaged in the making of a British video game which is intended for supply and where at least 25% of core expenditure is incurred in goods or services provided from within the European Economic Area

How to claim

All relevant video games must pass a 'cultural test' which administered by the British Film Institute (BFI) on behalf of the Department for Culture, Media and Sport. However this is just one step in the process.

What can be claimed?

Video Games Development Companies that are entitled to VGTR can claim:

a deduction in their tax bill.

if the game is loss making then companies can claim a payable tax credit.

Both the additional deduction and the payable credit are calculated on the basis of EEA core expenditure up to a maximum of 80% of the total core expenditure by the VDGC. Core expenditure is expenditure on design, production and testing

Like most aspects of Technology Tax Reliefs, the collection and collation of data in order to submit a claim and receive the benefit are not always straight forward. Like to find out more?

Games Companies

835

Games certified

690

Total UK Expenditure £M

119

Total VGTR paid £M

Source: UKIE July 2017.

Comments about VGTR

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The landscape of the UK games sector would be completely different without the evident contribution of the Video Games Tax Relief. The VGTR directly creates jobs, fuels technical and creative innovation, and allows the UK to be a real global player in the games and interactive entertainment sector.